US Dollar Index Tags A Fresh 2018 High On Mixed Economic Data

Generally speaking, US traders have been focused on the other side of the Atlantic this week, with particular attention on the continued Brexit drama and the mostly as-expected ECB meeting. With those situations (at least temporarily) behind us, the market’s eye has shifted back stateside in advance of next week’s highly-anticipated Federal Reserve meeting.

A series of economic reports this morning may prompt Fed policymakers to raise their eyebrows, though it’s a bit late in the game to deviate from next week’s (assumed) interest rate increase.November’s Retail Sales report printed at +0.2% m/m, a tick above the market’s expected +0.1% reading. Bolstering the strength of the report, sales in the report’s “control group” (a cohort seen as more representative of underlying consumer demand) rose +0.9% m/m, more than twice the median economists’ estimate. In a separate report, Industrial Production rose +0.6% m/m vs. +0.3% eyed, though the previous month’s report was revised lower.

While the retail sales report and industrial production reports were both solid, the forward-looking Markit PMI readings for December were more concerning. Both the manufacturing and services PMI figures came in lower than expected, as well as lower than last months’ readings. Overall, the composite Markit PMI reading printed at 53.6, the lowest level of economic activity since May 2017. In the words IHS Markit’s Chief economist Chris Williamson, “The flash PMIs bring signs of the US economy ending 2018 on a softer note. With business activity expanding at the slowest rate for one and a half years, the surveys indicate that the pace of economic growth has faded to 2.0% in December albeit closer to 2.5% for the fourth quarter as a whole…amid uncertainty about the economic outlook, linked in part to growing geopolitical concerns and trade wars.”

Matthew is a portfolio manager (US Equities and FX) at Faraday Research where he is responsible for the production and management of US Real Time Trader (large-cap US Equities) and US FX Daily ...
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Matthew is a portfolio manager (US Equities and FX) at Faraday Research where he is responsible for the production and management of US Real Time Trader (large-cap US Equities) and US FX Daily (G10 currency pairs) products. Subscribers include some of the world's leading brokerages and traders.

Matthew is also is a former Senior Market Analyst at Forex.com whose research is regularly quoted in The Wall Street Journal, Bloomberg and Reuters.

Based in the US, Matthew provides live trading recommendations during US market hours, covering forex and large cap US listed stocks.

Matthew holds both his Chartered Financial Analyst (CFA) and Chartered Market Technician (CMT) designations. He is a Member of the CFA Society and Market Technicians Association.

Matthew started his professional career with GFT Markets, where he quickly attracted a loyal following of traders who appreciated his unique combination of insightful market analysis and easy-to-understand reports. From there, Matthew moved into a Senior Market Analyst role at Forex.com allowing him to hone his fundamental analysis skills and reach a wider audience. During his time at Forex.com Matthew conducted over 1,200 educational webinars on different aspects of trading and trading psychology.